Many public figures have been tried and convicted for insider trading. What exactly does this mean?
The Crime of Insider Trading
If you knew something really good was about to happen, would you tell others? In some ways, this is what leads to insider trading. Insider trading occurs when private company information is shared with outsiders, and that information leads them to purchase stock. Then, the stock price goes up, and everyone profits because they were tipped off to buy beforehand. Because this diminishes fairness in the stock market, insider trading is a criminal offense.
Penalties for Insider Trading
The penalties for this crime can be quite severe:
- Up to 20 years in prison,
- Up to $5 million in fines, and
- Up to $25 million in fines for the business whose securities were being traded.
Insider trading may also be connected to additional criminal charges, including:
- Wire fraud,
- Bank fraud,
- Racketeering,
- Securities fraud, and
- Money laundering.
Accidental Insider Trading
Insider trading is one of the few crimes you can commit completely by accident. For example, you may be unaware that the information you used to make purchasing decisions was not public. Or perhaps you took a tip from a friend and didn’t know that information was confidential.
Luckily, if this is the case for you, you can use the mens rea defense. This is a Latin phrase that means ‘guilty mind.’ In cases of accidental insider trading, you weren’t aware you were committing a crime and had no intent to violate insider trading laws. Therefore, you did not have a guilty mind.
Financial Crimes Defense in Florida
If you have recently been charged with a crime for insider trading, contact Hager & Schwartz, P.A. today. Don’t underestimate the severity of these charges. You could be facing federal prosecution, years in prison, and millions in fines. It’s important to have strong legal defense on your side.